You are appointed as a business analyst at Bell Studio, which is a wholesaler of art supplies at Adelaide. The inventory of Bell Studio comes from the manufacturers of Australia, China, Japan, and New Zealand. The Accounting system followed by the company is a centralized system with networked terminals at different locations. The expenditure cycle procedures followed by Bell Studios are as follows:
The purchasing process of the company starts when a purchasing clerk checks the inventory subsidiary ledger of the company at his or her computer system at the starting of the working day. When they analyzed the low availability of the quantity of a certain item. The clerk is required to select the vendor to form a vendor list of the company and prepare the digital order of purchase. The two hard copies of the purchase order must be printed to send one copy to the vendor and the other to be retained by the purchasing department for record.
Once the inventory is received, the receiving clerk is required to inspect and reconcile it with the digital purchase order and update the ledgers. The report of receiving inventory has to be prepared, one copy of the report is required to be filed in the purchasing department while the other is required to be sent to the accounts payable department. The accounts payable department has to record the transaction in subsidiary ledger, accounts payable control account and inventory control account. In the end, a clerk has to send a copy of the invoice, receiving report and purchase order to the cash disbursement department of the company.
Cash Disbursement System
When an accounts payable department of the company sent the documents to the cash disbursement account, it has to maintain the documents until the payment is due for the payment. On the due date, a clerk has to prepare the cheque having the invoice number and send to the vendor after getting it signed from the manager.
The clerk than updates the cheque register accounts payable subsidiary ledger, payable controls accounts in the computer system. Once the information is updated. The final confirmation of the transaction will be done by receiving clerk by recording the files of invoice, purchase order, receiving report and copy of the cheque.
The employees of Bell studios record the hours worked on the time cards. Their supervisors are required to review the time cards to check the accuracy and submit it to the payroll department at the end of every week. The computerized system and updated information in terminals will connect the overall payroll system, which is placed in the data processing department of the company.
The distribution of employees to respective departments of the company by reviewing the payroll files of time worked by the company and the amount of cheque issued. The payroll clerk sends the copy of the payroll to accounts payable department and other departments of the company file the documents with time cards in the payroll department.
The accounts payable clerk has to review the payroll register and prepare the disbursement voucher manually. The clerk sends that prepared the voucher and payroll to the department of the general ledger. After the recording of all transactions, the accounts payable clerk will prepare a cheque for the entire payroll of the company and deposit it in the imprest account at a bank. Finally, the copy of cheque will be filed with the accounts payable department.
In this assignment a student is required to play the role of a Business analyst at Bell Studio and evaluate the processes followed by the company, Risks involved it and what internal control measures are required to be adopted by the company. The report must contain the following items:
- Data flow diagram of purchases and show cash disbursements
- Show system data flow diagram of payroll system
- Draw system flowchart showing the purchase system of the company
- The system flowchart of cash disbursement of the company has to be shown
- Also, prepare the system flowchart of the payroll system
The internal control weakness has to be provided and also evaluate the risk associated with it.